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									                                                                 Housing Affordability in Tasmania
                                      Submission to the Legislative Council Select Committee

TENANTS’ UNION OF TASMANIA SUBMISSION
Inquiry into Housing Affordability in Tasmania
Legislative Council Select Committee
August 2007


Outline of the Role of the Tenants’ Union of Tasmania

The Tenants’ Union of Tasmania Inc. (TUT) is a Community Legal Centre
largely funded by the Tasmanian Department of Health and Human Services
and the Commonwealth Attorney-General Department.
The TUT works to protect the interests and rights of tenants and:
    • Seeks to improve conditions in rental housing in Tasmania so that
       accommodation meets acceptable community standards;
    • Raises awareness within the community about tenancy issues; and
    • Promotes legislative change to improve conditions for tenants.
The TUT has extensive contact with tenants through its Telephone Advice
Line, Drop-In Service and Legal Representation and therefore has intimate
knowledge of situations confronting tenants in Tasmania.

The TUT also acts as a representative body for tenants and because of this,
along with time constraints and the expected submissions from various bodies
with expertise in housing stress and associated poverty, this submission will
focus on the Committee’s Terms of Reference (1), (2) and (6).

Introduction

Housing affordability has been near the forefront of the Tasmanian and
Australian political agenda since the housing boom began at the start of the
21st Century. However, this has been coupled with concern about the economy
in general and interest rates in particular, which has shaped perceptions in
mainstream society that housing affordability is an issue affecting families
with mortgages. From the TUT’s perspective, among the hardest hit by the
lack of affordability are tenants in the private rental market. Recent Census
data confirms this1. Changing levels of housing cost and ownership have
resulted in lower vacancy levels and significantly higher rents in most regions
of Tasmania. Secondary effects of the rise of housing costs felt by tenants
include reduced long-term security of tenure, substandard housing and, at
worst, homelessness.




1
 Hobart Mercury, 29 August 2007, p.1-2 and Australian Bureau of Statistics, 2006 Census of Population and
Housing, cat no. 2003.0
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                                                                     Housing Affordability in Tasmania
                                         Submission to the Legislative Council Select Committee

Position of the Tenants’ Union on Housing Affordability in
Tasmania

(1) The experiences of Tasmanians in housing stress and in
homelessness.

Underinvestment in Housing Stock
The right to shelter is a basic need and increasingly government policy has
been to turn to private investors to supply the stock of housing. The TUT has
seen exorbitant rises in rent across all regions in the State since the ‘housing
boom’ began around the turn of the millennium. Rent has risen far in excess
of the Consumer Price Index (CPI) and income and has resulted in greater
levels of housing stress and housing crisis for private renters2.
The TUT believes that despite ameliorative measures being taken to decrease
housing stress, or crises, market based solutions to housing have thus far been
demonstrated to be incompatible with the provision of this most basic need.
Increased regulation, to bolster tenants’ rights in the private market, are often
at odds with policies designed to increase the attraction of real estate
investment. Strategies such as Commonwealth Rent Assistance may even have
an inflationary effect on rents. The TUT urges Commonwealth and Tasmanian
Governments to prioritise direct investment in public housing that is
integrated into existing cities, towns and rural communities. A broad base
and increased eligibility for public tenants would have the benefits of:
    • encouraging a more textured public tenant community;
    • Tenants on higher incomes, by paying near market rent, would
        decrease the costs associated with subsidising other tenants;
    • The existing policies of minimum standards of accommodation in
        public housing would encourage minimum standards across the market
        place;
    • If a significant proportion of housing was controlled by the public there
        would be competition in the rental market, and rents could reduce
        throughout.

Recommendation A:                        The Commonwealth and Tasmanian Governments
                                         prioritise direct investment in public housing
                                         stock.

Rent Increases
The TUT has been dealing with more mid-lease rent increases from clients on
its telephone advice line and face-to-face advocacy. If there is provision for a
rent increase in the lease agreement, the landlord may increase rents every 6
months during the tenancy period. A tenant may challenge a rent increase
that is excessive. The application fee to the Magistrates Court is $42.35. The
issue the court is directed to have regard to is the ‘general level of rents’.
Evidence of the market rent for the premises in question may cost a tenant
between $300-$500 (for a professional evaluation), which is not recoverable,
even in the event of a successful application.



2
    Australian Bureau of Statistics, 2006 Census of Population and Housing, cat no. 2003.0
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                                                                    Housing Affordability in Tasmania
                                        Submission to the Legislative Council Select Committee

The Tenants Union has recorded many extreme rent increases demanded
from tenants. Examples include a 150% rise from $100 to $250 per week in
Devonport and a $100 rise from $180 to $280 per week in Hobart.

Under the Residential Tenancy Act (1997) s.23:
  (1) A tenant may apply to the Court for an order declaring that an increase
      in the rent payable under a residential tenancy agreement is
      unreasonable.
  (2) In determining whether an increase in the rent is unreasonable, the
      Court is to have regard to –
         (a) the general level of rents for comparable residential premises in
             the locality or a similar locality; and
         (b) any other relevant matter.

In effect, any rent increase may be granted and housing affordability is not
taken into consideration when determining rent increases. Therefore a
household could move from a manageable level of rent, through the ‘housing
stress’ level into ‘housing crisis’ during a tenancy, even without changes in
their income.
Property owners are in the advantageous position of knowing that the costs
and inconveniences associated with uprooting a household are high, and
many tenants will not challenge the rise through the court process. Tenants do
not have a right to break the lease as a result of the rent increase unless they
are willing to face costs of finding new tenants and paying rent until new
tenants are found.


Case study
Joan* is a pensioner, living with her pensioner husband and pensioner
mother. They moved into a three bedroom house in Devonport with a friend
of the family as landlord and the rent was set at $432 per calendar month3 or
$100 per week. They paid no bond and had no written lease, which made it
difficult to obtain Centrelink Rent Assistance.
After eight months the landlord notified the tenants that the rent was to be
raised to $1083 per calendar month or $250 per week. The TUT advised the
tenants that they could apply to the Magistrates Court to see whether this was
reasonable, but there was no certainty of a reduction due to the increase in
local market rents.
They decided it was too hard to fight it and moved out into $210 per week
accommodation where at least they can receive some Rent Assistance because
they now have a 12 month written lease. There were considerable relocation
costs, and Joan’s mother, who is blind, has had to familiarise herself with
another house. They do not know if a further lease will available after the
current lease expires. It is very expensive for them and they have applied for
public housing in the hope of eventually having affordable secure housing.

For more information on rent increases in Tasmania, including three further
case studies, see the 2006 TUT report Through The Roof, which can be found
in Appendix A in this submission.

3
    In Tasmania the legal maximum period of rent in advance is 4 weeks.
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                                               Housing Affordability in Tasmania
                           Submission to the Legislative Council Select Committee

Lease Termination
The TUT regularly comes face-to-face with homelessness from its clients due
to the inequities of sections of the Residential Tenancy Act 1997. Under the
Act any lease terminations that are instigated by the landlord require a
minimum of either only 14 or 28 days notice be given before a tenant must
leave the premises. Low vacancy rates, increasing rents and high security
deposits (bonds) along with short notice means that many tenants and their
families find it difficult to find alternative accommodation. When coupled
with finding accommodation near schools, places of employment and
convenient services, termination of a lease at short notice can be an extremely
difficult life event. In some cases homelessness results.
The Act gives no consideration to the tenant’s potential for finding suitable
alternative accommodation, treating the lease as a general contract rather
than one that is for the provision of a basic human right. This can mean that
tenants, through no fault of their own, can find themselves on the streets in
two or four weeks without recourse to the Law.
Sections 42 and 43 of the Residential Tenancy Act 1997 sets out when a notice
to vacate can be given by the owner and the length of notice required:
(1) An owner of residential premises may serve on a tenant of the premises a
notice requiring the tenant to deliver vacant possession of the premises to the
owner for any of the following reasons:
        (a) that the tenant has failed to comply with any provision of the
        residential tenancy agreement [14 days notice];
        (b) that a residential tenancy agreement expired less than 28 days
        before the service of the notice [14 days notice];
        (c) that the residential tenancy agreement is not for a fixed period and
        the premises are to be sold, renovated or used for another purpose [28
        days notice];
        (d) that a residential tenancy agreement is due to expire not more that
        28 days after service of the notice [14 to 28 days notice];
        (e) that an order has been made under section 86 of the Land Titles Act
        1980 for foreclosure of the premises [28 days notice];
        (f) that the premises are to be sold pursuant to section 78 of the Land
        Titles Act 1980 [28 days notice] ;
        (g) that the tenant has caused nuisance at the premises that is
        substantial [14 days notice].

Case Study
John* has lived in a Southern Tasmanian rural rental property for the past ten
years on a non-fixed lease with his partner and five children aged between 1
and 15. He is on a Disability Pension and his partner is on a Parenting
Pension. They are very good tenants helping with repairs and maintenance
over the ten years whilst the landlord has done little to the property.
After ten years, the landlord gives them two Notices to Vacate which are
invalid and a third that states the property is to be sold and that they have 28
days to leave. They have a solid footing in the community with social
networks and children in school and so they do not wish to leave the area.
Being a rural region, alternative accommodation is difficult to find. In
addition, John and his family receive help with their bond from Colony 47 but
landlords in the area discriminate against potential tenants by not accepting
bond assistance. Without Court intervention they may be homeless.
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                                                Housing Affordability in Tasmania
                            Submission to the Legislative Council Select Committee


High rents also make it difficult for some tenants to keep up-to-date with their
payments. If a tenant falls behind in rent by as little as one day, three times in
twelve months and is served notice on each of these occasions then they can
be evicted under Section 43(2) of the Residential Tenancy Act 1997:
     A notice to vacate on the ground of failure to pay rent is of no effect if a
     tenant pays all arrears in rent before that notice takes effect unless 2 or
     more notices to vacate on that ground have been served on the tenant
     during the immediately preceding 12 months.
Again, the eviction, which only requires two weeks notice, may lead to
homelessness.

(2) The impact of lack of affordable housing on the broader
economic and social wellbeing of the Tasmanian community.

Substandard Housing
Tenants regularly seek advice from the TUT in relation to accommodation that
is unhealthy, unsanitary, dangerous, inadequate, inefficient, dark and
unsecure. Currently the problem is acute with the shortage of housing
combined with high rents meaning that there is less incentive for landlords to
maintain houses at a standard acceptable to the Tasmanian community.
People are desperate for accommodation and would prefer substandard
and/or expensive housing to none at all.
Exacerbating the situation is the increase in property investors looking for
maximum returns on investment and interstate landlords who may not have
even seen the property and do not understand the human impact of the lack of
repairs.

Case Study
Tina* is a single parent with a 3 year old and a 6 month old child in the
Brighton area. She pays $200.00 per week rent, which is affordable for her
currently. Tina sought advice from the TUT in relation to general repairs to
the house, which is in very poor condition, and in relation specifically with her
septic tank, which has leaked into her yard. She had approached the property
owner several weeks ago, but he had refused to remedy the problem. The
advice we gave Tina was that most of the problems with the house existed
prior to her tenancy, and the Act only requires that a property is repaired in
accordance with the condition at the start of the tenancy. The septic tank
issue could be tackled in the following ways: (1) Tina could seek an order from
the Magistrates Court that the septic tank be repaired. She would need to pay
an application fee, provide proof of the problem, and argue that the property
owner is liable to repair it: (2) she could pay for the repair to be completed
herself, and seek reimbursement from the owner (which may lead to an
application in Court); or (3) she could terminate the lease. Tina told the TUT
that she did not have any money up-front to pay for the repairs. She said that
she did not have anywhere else to go, should she terminate the lease, and she
said that she was afraid of the Court process. Although she said that her
youngest child had been quite ill, and she suspected that the septic tank was
the cause of the problem, she would try and handle it herself. The TUT did not
hear further from Tina.

                                                                                5
                                                Housing Affordability in Tasmania
                           Submission to the Legislative Council Select Committee

The Residential Tenancy Act 1997 does not directly cover the issue of
substandard housing, but s32(1) states:
     The owner of residential premises is to maintain the premises as nearly
     as possible in the condition, apart from reasonable wear and tear, that
     existed on the day on which the residential tenancy agreement was
     entered into.

There is no direction given in the Act about the state of the premises required
prior to rental. Uniquely in Australian tenancy law, the Tasmanian Act allows
the owner to let premises deteriorate (within the meaning of ‘reasonable wear
and tear’) throughout the tenancy: there is no requirement for general
maintenance to keep the premises to the standard originally leased.

Under the Substandard Housing Control Act 1973, the Director of Housing
may reduce the rent of a substandard property until it is brought up to
standard. The TUT understands that this Act is presently under review and
although it does not set minimum or acceptable standards of housing, it may
be useful in extreme circumstances.

(6) Successful strategies in other Australian States that could be
effective in improving affordability.

Rent Increases
As stated earlier, the TUT published a law reform issues paper in 2006 called
Through the Roof.          It included detailed comparisons of State and
International legislation relating to rent increases.
To summarise the paper, Tasmania has some of the most inequitable
legislation in this area in Australia. All other jurisdictions have varying
degrees of comprehensiveness and ability to deliver just outcomes. The ACT
uses the Housing Consumer Price Index plus 20% to give a basic benchmark
of an acceptable rent increase, and most jurisdictions have many explicit
factors that are considered in determining whether a rent increase was
reasonable or not.
The TUT recommends the following with regard to rent increases:
Recommendation B:           Rents may only be increased by the Housing CPI
                            during the tenancy and that only one increase may
                            occur every twelve months and this must be stated
                            in the residential tenancy agreement. If a landlord
                            requires an increase in excess of the Housing CPI,
                            then the onus is placed on the landlord to justify
                            the excess increase.

It is reasonable for a tenant to know the approximate cost of rent throughout
the tenancy when signing a lease agreement, therefore the TUT submits that a
maximum Housing CPI increase is fair for both Tenant and Landlord. If there
are considerable changes in circumstances, there may still be the option of
seeking a rent increase through an impartial body. Landlords have a relative
position of power against tenants due to the relative scarcity of housing and
the essential nature of shelter, and therefore it is logical to place the onus of
justification upon the landlord.
                                                                               6
                                                Housing Affordability in Tasmania
                           Submission to the Legislative Council Select Committee


Recommendation C:           A list of definite factors be determined that can be
                            taken into consideration for rent increases (and
                            rent decreases).        A community consultation
                            process should be undertaken to determine these
                            factors.

A list of factors will help all parties including arbiters to determine fair rent
increases (and decreases) and give greater certainty to the process.

Recommendation D:           A tenant has the option of terminating the lease if
                            the rent is increased above the Housing CPI.

In the event of a high rent increase being granted tenants should be able to
seek new accommodation without the added burden of costs and possible
litigation. This measure will help allow tenants to avoid being pushed into
housing stress or housing crisis levels.

Lease Termination

Some sections of the Residential Tenancy Act 1997 are the most progressive in
Australia. For example, all states and territories in Australia except Tasmania
allow evictions without grounds. However, several states have fairer
conditions associated with evictions and the period of notice given.
The TUT believes the tenant’s prospects of finding alternative accommodation
should be paramount and therefore the following modifications to notice
periods should be adopted.




                                                                               7
                                                  Housing Affordability in Tasmania
                              Submission to the Legislative Council Select Committee

Recommendation E:
Sect.           Description            Present     TUT                TUT
42(1)                                  Notice    Proposed         Justification
                                                  Notice
 (a)    that the tenant has failed 14            14 days    This is a reasonable
        to comply with any days                             period as the tenant
        provision      of      the                          has an option to
        residential       tenancy                           remedy the breach
        agreement                                           within the notice
                                                            period.
 (b)    that a residential tenancy 14            90 days    In the current climate,
        agreement expired less days                         and with no prior
        than 28 days before the                             notice, a tenant must
        service of the notice                               have a reasonable
                                                            opportunity to find
                                                            suitable     alternative
                                                            accommodation.
 (c)    that     the    residential    28        90 days    This will allow tenants
        tenancy agreement is not       days                 a reasonable period to
        for a fixed period and the                          find            suitable
        premises are to be sold,                            alternative
        renovated or used for                               accommodation.
        another purpose
 (d)    that a residential tenancy     28        90 days    As above
        agreement is due to            days
        expire not more that 28
        days after service of the
        notice
 (e)    that an order has been         28        90 days    As for 42(1)(c)
        made under section 86 of       days
        the Land Titles Act 1980
        for foreclosure of the
        premises
 (f)    that the premises are to       28        90 days    As for 42(1)(c)
        be sold pursuant to            days
        section 78 of the Land
        Titles Act 1980
 (g)    that the tenant has            14        14 days
        caused nuisance at the         days
        premises       that      is
        substantial

Recommendation F:             In the event of a tenant falling behind in rent (rent
                              arrears), a negotiated repayment plan must be
                              attempted prior to eviction.

The paramount consideration in housing disputes should be the prevention of
homelessness and social dislocation. Where reasonable progress towards
repayment of debts are being made, leases should not be terminated.



                                                                                  8
                                                                     Housing Affordability in Tasmania
                                         Submission to the Legislative Council Select Committee

Substandard Housing

In Queensland, the Landlord must provide and maintain the premises in
good repair throughout the tenancy. In all other jurisdictions in Australia
except Tasmania, the Landlord must provide and maintain the premises in a
reasonable state of repair throughout the tenancy.

Recommendation G:                        The Residential Tenancy Act 1997 states that
                                         landlords maintain their properties in good
                                         repair, rather than the condition that they were in
                                         at the beginning of the lease.

Recommendation H:                        A Housing Standards code be developed in
                                         consultation with interested parties covering
                                         health, heating, insulation, plumbing, security and
                                         other relevant subjects. This code would be
                                         incorporated into the Residential Tenancy Act
                                         1997 and included as a term in tenancy
                                         agreements.



Conclusion

Housing is recognised internationally as a basic human right. It is an essential
human need, and access to many other rights, and participation in the
community depend on it. Australia, and Tasmania are currently experiencing
a crisis of housing affordability. Although much discussion has focused on the
purchase of property, according to the recent census over 20% of Tasmanians
rent their home, and over 35% are experiencing housing stress, or crisis.4
Many measures taken, or proposed, to combat this have an inflationary effect.

The Tenants Union of Tasmania submits that further investment in public
housing be a priority in government spending.

If Governments are going to continue to look to private investment to solve
housing access issues in our communities, much stronger regulation of the
private rental market is required, including regulation of minimum standards.
As long as market forces drive housing availability, tenants will always be in a
weaker position for bargaining individual accommodation conditions against
property owners.

The Tenants’ Union of Tasmania urges the Tasmanian Parliament to adopt the
recommendations in this submission, and where community consultation is
required, the TUT is ready to be an active participant in the democratic
process.




4
    Australian Bureau of Statistics, 2006 Census of Population and Housing, cat no. 2003.0
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